Although foreclosures in the state have hit a five-year low, real estate experts say millions of Californians who owe more on their homes than they are worth might not see their situation improve for years.

“It’s a huge drain on the economy,” said Dean Baker, co-director of the Center for Economic and Policy Research, a liberal think tank. “All these people will be approaching retirement with very little money. Ordinarily, you’d expect to have money in your home. But a lot of folks will be lucky to have half their home paid off because they lost so much equity.”

According to the real estate tracking firm DataQuick, more than a third of California homes with mortgages were underwater in February. That includes homeowners who bought at the peak of the housing boom and those who used their home as equity to borrow more money than it is now worth.

Home for sale (Justin Sullivan/Getty Images)

Locally, the proportion of borrowers whose mortgages are worth more than their homes ranged from 28 percent in Santa Clara County to 42 percent in Solano County.

According to the real estate tracking firm DataQuick, more than a third of California homes with mortgages were underwater in February. That includes homeowners who bought at the peak of the housing boom and those who used their home as equity to borrow more money than it is now worth.

Locally, the proportion of borrowers whose mortgages are worth more than their homes ranged from 28 percent in Santa Clara County to 42 percent in Solano County.

“Before the recession, during the housing boom, what fueled the economy in general was the concept that your home was your piggy bank, to do your vacation, remodel your house or make a major purchase,” said Ed Martinez, a senior economist at Moody’s Analytics.

Now, Martinez said, consumer spending is down, in part because many of those homeowners cannot afford to shop for anything but the necessities.

So far, government efforts aimed at helping struggling homeowners have stalled as financial institutions have balked at writing down debt for large numbers of consumers. In February, California Attorney General Kamala Harris announced a settlement with the nation’s five largest banks that is expected to bring $12 billion in principal reduction to California borrowers.

But the relief will come over three years and is broadly seen as addressing only a small portion of the debt accrued by homeowners who are underwater.

According to the S&P/Case-Shiller Home Price Index, Bay Area home prices fell 1 percent from May 2011 to April 2012 and remained 40 percent below their May 2006 peak.

“I don’t know anybody in the industry who talks about anything getting back to their peak for anything like 10 years,” said DataQuick analyst Andrew LePage.

In the meantime, LePage said, many homeowners are unable to sell their homes without ruining their credit and therefore are unlikely to move – even for a better job.

“Lots of people are stuck, and lots of people will be stuck for years in most of the state,” he said.